PennFuture hired a consultant to do the work without getting approval from DCED as required in the contract.

More troubling is the fact that after the consultant was terminated one year into the contract, the remaining grant funds were “repurposed” without notice to DCED or an amendment to the contract.

The remaining funds were used for other PennFuture energy-conservation efforts, including a daylong program on energy efficiency at the group’s annual conference last year.

PennFuture President and CEO Jan Jarrett takes full responsibility.

“It’s really my fault,” Jarrett told The Patriot-News.

The grant came with a “boilerplate” contract, she said.

“I didn’t read it. My bad,” she said. “That’s the primary reason we just decided not to quibble and give the money back.”

Although DCED records indicate that more than half the grant was spent as intended, PennFuture returned the complete $138,250, plus interest in line with market rates, for a total $141,028.

DCED spokesman Steven Kratz said, “It is rare that an entire amount of a grant is returned because it is clearly written within the contract that changes to scope of the project must be submitted to DCED prior to repurposing funds.”

When asked if DCED plans to pursue the matter further, such as referring it to the Office of Inspector General, Kratz said, “It is extremely rare to encounter a situation like this, and we have not decided what course to follow other than to make certain that all grant and contract guidelines are clear to applicants and that they understand there can be no impromptu ‘repurposing’ of taxpayer dollars.”

Kratz said the DCED requires a “closeout report” when a contract is finished, including an audit showing state money was used properly.

“In this case, the closeout report would have revealed a violation of the contract and we would have requested the organization to return the funds,” Kratz said.

The closeout audit on the PennFuture contract was due Oct. 20.

PennFuture cut its check to the state on Oct. 14 and sent its explanatory memo on Oct. 18.

“PennFuture made changes in the activities that it conducted under the contract ... without executing a contract amendment,” the memo explained.

The problem surfaced as a result of scrutiny from Corbett administration officials this summer, when PennFuture requested the governor’s blessing on a federal grant to advance the use of solar power in western Pennsylvania.

Questions arise

When Jarrett walked into the governor’s office on Aug. 22 seeking that blessing, she got a surprise.

Before Henderson became the governor’s “energy executive,” he served as chief of staff to Sen. Mary Jo White, R-Venango County.

Within a month of PennFuture being awarded the grant in 2009, White’s office made a Right To Know Law request for documents and sent a two-page memo full of questions to then-DCED Secretary George Cornelius.

Once in the governor’s office, Henderson raised lingering questions with Roddy.

Roddy — a “special assistant to the governor” who penned much of Corbett’s budget address — had been an acclaimed reporter for The Pittsburgh Post-Gazette. Corbett spokesman Eric Shirk said Roddy’s knowledge and research skills aid Corbett and Cabinet secretaries.

According to an internal memo Roddy sent to DCED Secretary C. Alan Walker, he and Henderson had questions about PennFuture’s contract.

They both were “curious as to why an outside advocacy group would receive substantial taxpayer funding to promote awareness of (Act 129 of 2008, an energy conservation mandate) after having actively lobbied on behalf of the same legislation.”

The grant was to make school districts and municipalities aware of energy conservation and efficiency requirements under the act and funding opportunities available to help them comply.

Then, Jarrett asked for help getting more public money, this time from the federal government.

At the Aug. 22 meeting, Roddy “wanted to know the name of the outside consultant who received the lion’s share of the grant,” he wrote in the memo. He also wanted to know why there was no record of PennFuture getting DCED approval.

Jarrett, he said, “surprised me by saying that she did not believe PennFuture was required to do so. Patrick stated that this provision was in the contract. I concurred.

“Jarrett then informed us that PennFuture ‘severed’ its relationship with [the consultant],” Roddy’s memo states, because he had decided to run for public office.

Roddy wanted to know who replaced the consultant.

Jarrett said no one had.

“She said, ‘We repurposed the money’ and applied it to other efforts,” according to Roddy’s memo, which Jarrett does not dispute.

“These uses would have been well outside the services promised in the contract,” he wrote, “and I could not imagine that DCED would have thought it appropriate to apply community development monies to such a thing.

“Again, I asked Ms. Jarrett if PennFuture consulted with DCED before using the contract funds in this way.

“Her reply was, ‘I don’t think we did.’”

Another PennFuture employee at the meeting, Christine Simeone, “added that PennFuture would offer a full accounting that would justify their use of the money,” Roddy’s memo states.

That promise was enough to get the governor’s blessing for the federal grant.

PennFuture had asked for a letter of support for a solar energy grant, representing a coalition of 23 municipalities in the southwest, including the city of Pittsburgh and Corbett’s hometown of Shaler.

An official letter of support — with the provision that PennFuture would keep no money “for project management, administration or any other purpose” — was issued eight days later.

Two months later, PennFuture returned all the money from the state grant.

‘Slipped through the cracks’

Jarrett explained to The Patriot-News: “We have lots going on. It slipped through the cracks.”

Roddy, in his memo, concluded, “While I believe that PennFuture has done the proper thing in returning the DCED money with interest, I remain troubled by how cavalierly they treated this contract and I doubt they’d have taken this corrective action had we not looked into it and confronted them.”

“One expects a nonprofit, public interest group that professes to be working for the civic good to be mindful of basic standards of responsibility when it comes to the public purse,” Roddy said.

On Dec. 7, the U.S. Department of Energy awarded PennFuture $315,697 to “create model laws to remove barriers to solar power, and to create innovate funding tools to make solar accessible to families and small businesses” in southwestern Pennsylvania.

PennFuture is administering the grant — free of cost — for a coalition of local governments and environmental groups.

What faith can the public have that PennFuture will do a better job of it than they did with the DCED grant?

“They can have 100 percent level of faith,” Jarrett said.

“When we make blunders like this, we take action to make sure they don’t happen in the future,” Jarrett said.

PennFuture now has a process that ensures that “staff attorneys review the nuts and bolts in contracts,” she said.

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